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Federal Regulation of Third-Party Litigation Finance

Posted by on Saturday, March 30, 2019 in Notes, Volume 72, Volume 72, Number 2.


Third-party litigation finance has become a powerful and influential industry that will continue to play a significant role in shaping the legal landscape for years to come. The opportunities—and challenges—introduced by this burgeoning industry are legion, and with them has come a swath of disparate state regulations. These regimes have failed to balance important consumer- and commercial-lending protections with facilitation of the growth of an industry that is essential to increasing access to the courtroom.

In response, this Note contends that a federal agency, the Consumer Financial Protection Bureau, should be delegated the authority to promulgate regulations (1) capping interest rates at a percentage in line with fair commercial practices, (2) expressly prohibiting financier control over litigation decisions, and (3) limiting the information that financiers can request from their clients. Additionally, this Note proposes amending the Federal Rules of Civil Procedure to mandate disclosure of litigation-finance agreements in all cases.

Austin T. Popp